Why does Ubuntu insist on recreating the 'Downloads' folder, even when nothing has been added there? Perhaps alternatively, what processes are trying to access this directory, and ensuring that it exists?
It is a default recovery method; you can remove any normal directory inside /home/$USER/ and the system will recreate it when you log into the desktop.
How can I reassign whatever special status 'Downloads' holds to my new 'dls'?
~./config/users-dirs.dirs and change the one that is about DOWNLOADS to what you want (my directories are on my 2nd disk on not on my boot disk):
# This file is written by xdg-user-dirs-update
# If you want to change or add directories, just edit the line you're
# interested in. All local changes will be retained on the next run
# Format is XDG_xxx_DIR="$HOME/yyy", where yyy is a shell-escaped
# homedir-relative path, or XDG_xxx_DIR="/yyy", where /yyy is an
# absolute path. No other format is supported.
(and would like all my directories to start with lower-case characters.)
Obviously you can change all of them. Mind the comments: only 2 methods are supported: either relative $USER or absolute (a dir from /).